Download Developing Better Policies in the Indian Coal Sector

Developing Better Policies in
the Indian Coal Sector
Ananth Chikkatur & Ambuj Sagar
Belfer Center for Science & International Affairs
Kennedy School of Government, Harvard University
Conference on Managing the Social and
Environmental Consequences of Coal Mining in India
Nov 20, 2007, New Delhi
Nov 20, 2007
Chikkatur and Sagar
1
Outline
• Role of Coal in India’s energy sector
• Key Challenges
– Demand for coal
– Environmental and Social Issues
• Institutional and Governance Issues
• Key Policy Focus areas
Nov 20, 2007
Chikkatur and Sagar
2
Role of Coal in India’s Energy Sector
Primary Energy Consumption
600
b) 350
Electricity
Railways
Steel
Cement
Other industries
300
500
250
Million Tons
400
300
200
Coal Consumption
200
150
100
100
50
Source: Planning Commission.
2005
Wind
2000
Hydro
1995
Nuclear
1990
Natural Gas
1985
Oil
1980
Coal and Lignite
1975
Non-comercial
0
1970
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
1970
0
Source: MOSPI
• More (and better use of) energy is critical for India’s
development
• Coal: 53% of commercial energy; 71% of electricity
generation
• 80% of domestic coal is used for electricity
Nov 20, 2007
Chikkatur and Sagar
3
Increasing demand for coal
• Electricity generation expected to increase sixfold by 2030
• Future growth of electricity in India to rely
heavily on coal
– Other sources are uneconomical or have insecure
supplies or are complex to build
Î Expansion of coal exploration, mining & use
Also consistent and high quality of coal needed
Nov 20, 2007
Chikkatur and Sagar
4
Future Coal Demand Forecasts
2500
Actual Production
Coal Vision 2025 (8% GDP)
IEP Report
IEP--Scenario 5
WG for XI Plan
5.35% growth
EIA-IEO2006 (ref)
EIA-IEO2006 (high)
EIA-IEO2006 (low)
IEA-WEO2006 (ref)
Million Tons
2000
1500
2004
China: 1.8 BT
U.S.: 1 BT
2030
China:
3.9--4.2 BT
U.S.:
1.3--1.6 BT
1000
500
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
0
• Indian projections higher than IEA/EIA
• Domestic production might be unable to cope with demand
Æ Rising imports
More coal mining Æ Better management of environmental and social costs
Nov 20, 2007
Chikkatur and Sagar
5
Environmental & Social Costs
• Loss of land Æ Large scale displacement
– Mining (12%) is second compared to dams (77%)
– 30 million people displaced from all development projects
(Fernandes/Sethi)
– 55% of displaced are scheduled tribes (Sethi/Bhusan)
– Only 29% are ‘rehabilitated’ – 13 million uprooted
• Social Costs
– Breakdown of social and economic structure
• Environmental Costs
– Loss of forests and land degradation
– Dust from mining operations
– Impact on water resources (aquifer loss, runoff, acid mine drainage)
– Adds to further forced migration
– Impact of biodiversity and wildlife corridors
Nov 20, 2007
Chikkatur and Sagar
6
Institutional and Governance Issues
• Government Dominance
– MoC controls nearly all policy related matters on coal
• Others: MoP, MoM, MoEF, MoL, MoF, PC
– Changes require agreement among many actors
• Bureaucracy has resisted changes
• Legislative changes difficult Æ reforming coal sector within existing
framework leads to convoluted policies
• Governance and Corruption
– Illegal mining
– Lack of accurate data on depleted reserves
– Fear of retribution and loss of private gains
Nov 20, 2007
Chikkatur and Sagar
7
Key Policy Issues (1)
Systems level perspective:
• Manage Coal Demand in Power Sector
Æ Breathing room for coal sector to make changes
• Efficiency improvement
• Reducing T&D losses and theft
• Demand management and end-use efficiency
• Better data collection and assessment
– Some data available with CCO/CIL
– Critical data missing
• Economically mineable resources, depleted reserves, number of
displaced people, abandoned mines, etc.
– Important for improving efficiency of mining and R&R
policy implementation
Nov 20, 2007
Chikkatur and Sagar
8
Key Policy Issues (2)
Role of coal mining technology – reducing environmental impacts
Technology and policy roadmapping process:
•
Need for visioning exercise with stakeholders
Vision
Led by government, participation by all major stakeholders
Technology assessment/policy options analysis
Technical personnel and analysts from govt., industry, utilities, academia, NGOs
Roadmapping and Planning
Technical personnel and analysts from govt., industry, utilities, academia, NGOs
•
Planning with people, rather than planning of people or planning for people
•
Technology development, acquisition, adaptation and deployment
Nov 20, 2007
Chikkatur and Sagar
9
Key Policy Issues (3)
R&R policy context
– Recent policies perceived to support industry, rather than affected
people
– Policy formulation process has been contentious
– Big gap between CIL R&R policy and implementation
– SEZs have raised many flags on the land acquisition process
– Demand for jobs has been a show-stopper
• Alternative economic activities and community development
– Locations of mines determined by geology
• No siting flexibility
• Some flexibility through mining technology and mine planning
– Atmosphere of mistrust exists between people/NGOs and coal
companies
• NRR2007
– Improvement, but questions remain on implementation
Nov 20, 2007
Chikkatur and Sagar
10
Key Policy Issues (4)
Environmental Impact Assessment
– Complex, laborious process – data intensive, takes time
– Extensive stakeholder input necessary
– Need to be performed by accredited agencies
• Not directly funded by project proponent
– Problems with fraudulent EIAs
• “cut-and-paste”
• Incomplete data
– Project proponents:
• Want timely action and clear guidelines
• Clearance process is viewed as being arbitrary and not
transparent
• Public hearings agenda often dominated by R&R issues
– EIAs are now done after project preparation
• Techno-economics and environmental assessment in parallel
Nov 20, 2007
Chikkatur and Sagar
11
Key Policy Issues (5)
New approaches
– Reclamation bonds (outside of CFoI)
– Green credits (afforestation)
– Revenue sharing between community and projects
– EIA and SIA prior to project formulation
– Involvement of local community in EIA preparation
– Use of satellite imagery to build data sets
– Land leasing, instead of acquiring
Need to experiment with new ideas
– Policies must allow space for that
Nov 20, 2007
Chikkatur and Sagar
12
Conclusion
• Mining of coal is bound to increase
• Impact mitigation requires both:
– Managing coal demand
(coal per unit energy service)
– Managing mining impacts
(impact per unit coal extracted)
• Process is critical in developing better policies
• Policy space needed for exploring new ideas
Nov 20, 2007
Chikkatur and Sagar
13